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Posted by: National Bankruptcy Forum
Last updated Sept. 19, 2017.
While you can file bankruptcy as many times as you like, you can only receive a discharge every so often. Wiping away debts and getting a fresh start through the bankruptcy discharge is the primary goal of most debtors. The question then is not really “how often can you file for bankruptcy?” as much as it is “how often can you receive a discharge of debts through bankruptcy?”
This post will review what you need to know about Chapter 7 and 11 discharges, previous Chapter 12 and 13 bankruptcy discharges, what happens when your discharge is revoked, and when you will need a qualified bankruptcy attorney.
How to Get a Discharge in the First Place
Most debt can be discharged in a personal bankruptcy case, with the exception of student loans and tax debt. So long as you qualify for the bankruptcy chapter under which you file, most consumer bankruptcies filed with the help of an attorney are discharged — and you’ll pay pennies on the dollar for your debt.
Your bankruptcy discharge can be denied, however, if you do any of the following:
1. Attempt to defraud: If you transfer, move, or conceal property, you’re in big trouble. Make sure to talk about all transfers before your bankruptcy filing with your bankruptcy attorney.
2. Conceal or destroy information: This also goes along with failing to keep information on your financial situation in the first place. Keep all records on your finances in a safe and organized place.
3. Lie: A no-brainer, but, any sort of false statement made under penalty of perjury may not only land you back in court, but in jail.
4. “Lose” assets: This is when you can’t explain any sort of loss or deficiency in assets.
5. Refuse to comply with a court order: Similar to lying, disobeying the court is a bad idea.
6. Fail to take an instructional course: When you file for bankruptcy, you must take two instructional courses in finances. One is about credit counseling, while the other is about financial management. These courses are mandatory under the federal law that governs bankruptcy.
If you follow the rules of bankruptcy and don’t commit any of the above offenses, your bankruptcy should be in the clear.
Frequency of Bankruptcy Discharges for Chapter 7, 11, 12, 13
But what happens when you need to file bankruptcy again?
Once you have already filed for Chapter 7 bankruptcy, the bankruptcy court will deny a discharge in a subsequent Chapter 7 case if you already received a discharge in your previous Chapter 7 or Chapter 11 case if it was filed within the last eight years. In simple terms, you can obtain a Chapter 7 bankruptcy discharge every eight years. The eight-year time period starts to run from the date your previous case was filed.
The bankruptcy court will also deny a Chapter 7 discharge if the debtor has previously received a discharge in a Chapter 12 or Chapter 13 case filed within the last six years unless the debtor meets fairly strict requirements regarding the amount of debt she paid back in her Chapter 13 case. Similarly, a debtor is ineligible for a second discharge under Chapter 13 if he or she received a prior discharge in a Chapter 7, 11, or 12 case filed within four years of the current case or in a Chapter 13 case filed within two years of the current case.
Your Bankruptcy Discharge Can Be Revoked
Additionally, bankruptcy courts may revoke a discharge under certain circumstances. For example, a trustee, creditor, or the U.S. trustee may request that the court revoke the debtor’s discharge in a Chapter 7 case based on allegations that the debtor obtained the discharge fraudulently, like if you concealed property or failed to keep adequate records.
Typically, a request to revoke the debtor’s discharge must be filed within one year of the discharge or, in some cases, before the date that the case is closed. The court will decide whether such allegations are true and, if so, whether to revoke the discharge.
Complaints Seeking Revocation of Discharge Will Require Retaining Counsel
Keep in mind that the mere filing of an adversary proceeding (a lawsuit filed in the bankruptcy court) seeking to revoke the discharge will require hiring an attorney to answer the allegations of improper conduct. If these allegations are not addressed in a timely fashion, the debtor will lose their discharge by default.
The possibility that a bankruptcy discharge can be revoked highlights the importance of full disclosure to your bankruptcy attorney. You must inform your bankruptcy attorney of all assets and debts in order to ensure that your discharge is not subsequently challenged.